Ongoing banking crisis holds back EU economy in Q2 2012

Business prospects in Europe continued to be held back by the ongoing banking crisis affecting the region during the second quarter of 2012.

The latest GfK Consumer Climate Europe and USA survey has observed that renewed escalation of the financial crisis has set in over the last three months, taking many countries by surprise.

Economic expectations are slumping in countries such as Italy, Spain and Greece, while the EU has approved a number of bailout packages for several of the most heavily debt-ridden nations.

GfK noted that initial reactions to these measures have been positive, but observed that additional moves - such as the introduction of uniform banking supervision - will may also be needed.

"Whether these measures successfully reduce the severity of the financial crisis and prevent the breakup of the eurozone remains to be seen in the coming months," said the report.

Data from the Markit Eurozone Composite Purchasing Managers' Index for June 2012 showed that the region's economic performance contracted by approximately 0.6 per cent during the three months.